In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-3774

CARMEN FRANKLIN and JENIFER CHISM,

on behalf of themselves and all 

others similarly situated,

Plaintiffs-Appellants,

v.

PARKING REVENUE RECOVERY 

SERVICES, INC., and

BRYON BELLERUD II, P.C.,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 13 C 02578 — Edmond E. Chang, Judge

____________________

ARGUED SEPTEMBER 10, 2015 — DECIDED AUGUST 10, 2016

____________________

Before FLAUM, RIPPLE, and SYKES, Circuit Judges.

SYKES, Circuit Judge. Carmen Franklin and Jenifer Chism 

parked their cars in a Chicago-area lot owned by Metra, the 

public commuter railroad, and operated by CPS Chicago 

Parking, LLC. (“CPS”). The lot offers parking spaces to the 
2 No. 14-3774

public at the rate of $1.50 per day. CPS says the two failed to

pay and sent them violation notices demanding payment of 

the $1.50 fee and a $45 nonpayment penalty. When they still 

did not pay, CPS referred the matter for collection to Parking 

Revenue Recovery Services, Inc. (“Parking Revenue”), which 

sent them collection letters for the $46.50 total due.

Franklin and Chism responded with this class action 

against Parking Revenue alleging violations of the Fair Debt 

Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq. 

The district court entered summary judgment for Parking 

Revenue, holding that the FDCPA does not apply because

the unpaid parking obligations are not “debts” as that term 

is defined in § 1692a(5).

We reverse. The obligations at issue here—unpaid parking fees and nonpayment penalties—are “debts” within the 

meaning of the FDCPA. That statutory term comprises 

obligations “arising out of” consumer “transactions.” Parking in a lot that is open to all customers subject to stated 

charges is a “transaction.” The obligation that arises from

that transaction is a “debt,” and an attempt to collect it must 

comply with the FDCPA.1

 

1 We solicited the views of the Federal Trade Commission on this issue.

The FTC has an interest in protecting consumers from abusive debtcollection practices. The FTC accepted our invitation and filed a brief as 

amicus curiae joined by the Consumer Financial Protection Bureau, 

which shares the FTC’s interest in protecting consumers and is authorized to enforce the FDCPA. 15 U.S.C. § 1692l(b)(6). In the view of these 

federal agencies charged with enforcing the statute, the obligations at 

issue here are indeed debts covered by the FDCPA. The agencies take no 

position on the ultimate merits. We appreciate their willingness to assist 

the court.
No. 14-3774 3

I. Background

In June 2012 Franklin and Chism parked their cars in a 

Chicago-area lot owned by Metra (the Commuter Rail 

Division of the Regional Transportation Authority) and 

operated by CPS, a wholly owned subsidiary of Central 

Parking System, Inc. CPS is a private company that contracts 

with Metra to manage parking lots adjacent to commuter rail 

stations throughout the Chicago area. Under its contract 

with Metra, CPS keeps a percentage of the gross revenues 

collected from the lots that it operates. The signage and the 

pay machine at the lot plainly state that it costs $1.50 for 

daily parking. And CPS tells us that the signage also states 

that a fee of up to $60 will be assessed to parkers who fail to 

pay.

Franklin and Chism both insist that they paid the $1.50

upon parking, but CPS claims they parked without paying

and now owe the $1.50 parking fee and a $45 nonpayment 

penalty. CPS referred the matter to Parking Revenue, which 

in turn sent the women collection letters. The letters noted 

that Franklin and Chism had previously received one or 

more parking-violation notices and demanded payment of 

“this debt” within 30 days or alternatively, notification in 

writing that they dispute the debt’s validity.

Franklin and Chism responded with this class action 

against Parking Revenue alleging that the collection letters 

violated the FDCPA in numerous ways. The suit alleges that 

parking in the lot was a “transaction”—Central Parking

offers parking to all comers, which the plaintiffs accepted by 

parking in the lot—and the payment obligation therefore 

was a debt, the collection of which is governed by FDCPA.
4 No. 14-3774

The district judge disagreed. He characterized the collection letters as attempts to collect fines imposed for violating

the parking lot’s rules. The judge said that the payment 

obligation was “materially indistinguishable from a ticket 

issued for failure to feed a parking meter.” As such, it did 

not reflect a consensual transaction; Franklin and Chism

essentially stole the parking spaces from CPS. On this reasoning, the judge concluded that the obligations were not debts

within the meaning of the FDCPA and granted Parking 

Revenue’s motion for summary judgment.2

II. Discussion

We review the court’s order granting summary judgment 

de novo, evaluating the record in the light most favorable to 

Franklin and Chism and drawing all reasonable inferences 

from the evidence in their favor. Townsend v. Cooper, 759 F.3d 

678, 685 (7th Cir. 2014).

The FDCPA prohibits various “abusive debt collection 

practices,” 15 U.S.C. § 1692(e), including the use of false or 

misleading representations, id. § 1692e, and other unfair 

practices, id. § 1692f, to collect any debt. Franklin and Chism 

contend that Parking Revenue’s collection letters violate the

FDCPA in several ways.3 Our present concern, however, is 

 

2 The suit also named Bryon Bellerud II, an attorney for Parking Revenue 

responsible for sending the collection letters. The judge entered an order 

of default against Bellerud because he failed to answer or otherwise 

plead. As we’ve just explained, however, the judge later concluded that 

the FDCPA is inapplicable.

3 Franklin and Chism allege that the letters (1) falsely represented that in 

order to avoid a presumption of the debt’s validity, they must dispute the 

charges and fees in writing; (2) attempted to collect the additional $45 

charge without express authorization to impose the charge; and (3) made 
No. 14-3774 5

limited to the threshold question whether the FDCPA even 

applies. That question turns on whether the underlying 

payment obligations are debts within the meaning of 

§ 1692a(5). If they are, then the FDCPA applies and summary judgment was improper.

Section 1692a(5) defines a “debt” as “any obligation or 

alleged obligation of a consumer to pay money arising out of 

a transaction in which the money, property, insurance, or 

services which are the subject of the transaction are primarily for personal, family, or household purposes.”

Two parts of the definition need further explanation. 

First, although the statute does not define “transaction,” we

have held that the term is “a broad reference to many different types of business dealings between parties.” Bass v. 

Stolper, Koritzinsky, Brewster & Neider, S.C., 111 F.3d 1322, 

1325 (7th Cir. 1997). Next, the “arising out of” language 

limits the FDCPA’s reach to only those obligations that are 

created by the contracts the parties used to give legal force to 

their transaction. Id. at 1326. This means that, in general, 

efforts to collect on obligations that are created by other 

kinds of legal authorities, like tort law or traffic regulations, 

are not covered by the FDCPA.

The parties rightly agree that if Franklin’s and Chism’s 

obligations arise out of contract law, they are debts covered 

by the FDCPA. And it’s clear that contract law is the source 

of the obligations at issue here. Indeed, at oral argument 

Parking Revenue’s attorney was unable to explain what 

 

false, deceptive, or misleading representations. The judge didn’t reach 

the merits of these arguments because he concluded that the FDCPA was 

inapplicable.
6 No. 14-3774

source of law other than contract could have created the 

obligations that its letters attempted to collect. By parking in 

the lot, Franklin and Chism accepted CPS’s offer to park at 

the stated cost. At that moment a contract was formed

obligating them to pay the stated price or pay a higher price 

if they left the parking lot without paying. 

It matters not that Metra owns the lot, or that the contract 

between Metra and CPS sometimes refers to the $45 nonpayment charge as a “fine.” The crucial question is the legal 

source of the obligation. Although Metra is a governmental 

agency, no municipal ordinance or regulation obligates 

park-and-dashers to pay the $45; that obligation comes from 

the contract that is formed when a customer parks in the lot. 

Metra owns these lots like any other parking-lot proprietor 

and contracts with CPS to operate them. That contract 

provides that any dispute between “patron[s]” (parkers) and 

“[o]perator” (CPS) shall be handled “as a matter of contract.” So the district judge’s analogy to fines assessed for 

nonpayment at municipal parking meters was inapt. These 

obligations have no source in municipal law.

The judge’s analogy to theft was also inapt. The judge 

thought a car parker’s failure to pay resembled the condition 

of the thief that we described in Bass. There we noted that 

the FDCPA doesn’t cover a thief’s obligation to pay for the 

goods he steals if his obligation is created by tort law (e.g., 

the tort of conversion), see RESTATEMENT (SECOND) OF TORTS

§ 222A (Am. Law Inst. 1965), rather than by contract law, see 

Bass, 111 F.3d at 1326. The obligations at issue here, however, are not premised on the tort of conversion; they are 

premised exclusively on the contract that was formed between Franklin and Chism on one side and CPS on the other. 
No. 14-3774 7

This distinction between contract and tort is the reason that 

the obligation incurred after paying with a bad check gives

rise to a “debt” under the FDCPA while shoplifting does not.

See id. at 1325. When the check is tendered for payment, a 

contract is formed. See id.

To conclude: The signs at the parking lot offered a parking spot to all comers for $1.50 per day and noted a penalty 

for failing to pay. Franklin and Chism each accepted this 

offer—and thus formed a contract—when they parked in the 

lot. Their obligation to pay the $46.50 is premised entirely on 

this contract. Parking Revenue was therefore attempting to 

collect debts, and its attempts are regulated by the FDCPA’s

protections.

REVERSED.